Ashley:
This is Real Estate Rookie, episode 271.

Ava:
First, you need to determine an asset class you want to do, and then you need to educate yourself on it and make that step-by-step checklist. Because once you have that checklist and it’s so much, because it seems so crazy when there’s a whole bunch of things, you’re like, “Oh, I have to do this, I have to do this. I’ve talked to insurance people.” But if you just lay it out on a checklist step-by-step in front of you, it cancels out all the noise because all you have to focus on is that next step. And if you have due dates by it, it’s great for setting goals.
So I recommend just figuring out what asset class you want to do and just choose one, whether it’s multifamily Airbnbs, arbitrage, anything, and then make that checklist with a step-by-step, actionable steps that you can take.

Ashley:
My name is Ashley Kehr and I’m here with my co-host, Tony Robinson.

Tony:
And welcome to the Real Estate Rookie Podcast, where every week, twice a week we’re bringing you the inspiration, motivation, and stories you need to hear to kickstart your investing journey.
And today, I want to shout out someone by the username of gzreta9 and gzreta says, “Amazing podcast. This is the best podcast to listen to when you are starting your real estate journey. Tons of information, super easy to follow. Thanks to the host, Ashley and Tony who have great personalities and keep every episode interesting and fun to listen to. It’s also very helpful to listen to all of the guests they bring on to the podcast to stay motivated and learn even more. Keep it up guys.” So gzreta we appreciate you.
And for all of our rookies that are listening, if you haven’t yet left us an honest rating and review, please do. The more reviews we get, the more folks we can reach. The more folks we can reach, the more folks we can help, which is what we love doing here at the podcast.
Ash, I think it’s so funny reading the reviews because it’s like we have the amazing comments like that, and then if you go on certain parts of the internet, on social, it’s just the exact opposite where people hate on the podcast for all these other reasons. So it’s crazy that you can listen to the same exact show that gets such polarizing-ly different opinions.

Ashley:
Which you tell me all the time, we can’t please everyone. So Tony, what’s new with you? How is it in sunny California? We got snow today and it’s cold.

Tony:
It’s snowed out there. That’s crazy. No, it’s, I don’t know, it’s like 70 and perfect out here today, but no, it’s cool. We’re still working on our West Virginia deal, so we’re excited for that one. Feels like we’re getting close to raising all the funds we need for that.
Initially we were looking to raise about a million bucks, but we’ve since made some changes to what we’re doing at the property, so we’re looking to raise about 1.3 now. So it’ll be cool once we get that project done.
I’m just super excited to really see this one across the finish line and the finished product. Once we’re done with it, I am like, “Oh my God, I can’t wait to share it with all the rookies because it’s going to be so cool.”

Ashley:
I’ve been getting your emails and today I was at Lowe’s with Daryl and I got one, and I’m just like, “Okay, read this.” And then I’m kind of explaining to him as to how you are structuring the deal, and it’s just so intriguing to me, so intriguing.
And so I recommend any of you, even if you just want to learn stuff from Tony, you don’t even want to buy into the campground or invest or private money or anything. You have no interest in that. Just like to learn from him and what he is doing. Go, what is it? alphageekcapital.com, and you can just sign up to your newsletters.

Tony:
Yeah. They can head over to Alpha Geek.

Ashley:
It’s so cool.

Tony:
I’ll break down just for those that are listening, how we’re structuring this deal and how it’s different from the last commercial deal we did, so.

Ashley:
I was going to allude for them to sign up to your email list so that they have to go to that, but now go ahead, no one has to sign up now.

Tony:
They got to sign up. I can go over free. So when you buy commercial real estate, you have a couple options. You can syndicate the deal, which is what a lot of people do. They raise the majority of the money, then they bring in debt, I’m sorry, they bring in debt to cover the majority of the purchase, and they use raised syndicated funds to kind of cover the remaining balance.
But because the deal size is pretty small on this one, our total project costs or total everything is 1.3 million, we realized it didn’t quite make sense to syndicate such a small deal. So instead of doing a syndication, we said, “Let’s just raise debt. We’ll just do the whole thing with debt.” And I have a few friends that bought apartment complexes in the last year and it was around the same price and they used all debt to cover it.
Now, we’ve used debt to fund all of our flips over the last year and a half, so we already know how to raise private money from folks, but this is just at a much larger scale just for one big deal. So essentially what we’re doing with all of our investors is we’re offering them 15% annual interest.
So if someone gives us for every $100 to get $15 back and it’s a three-year note, we’re not paying any interest over the first 12 months, and then starting in year two, we’ll pay interest quarterly, and then we’ll pay everyone off at the end of 36 months with all of their accrued interest plus their principle.
So it’s a pretty strong interest rate at 15%, right? I mean, that’s a pretty good long-term rental deal, better than what you’re probably going to get in the stock market from those people. So we felt it was kind of a win-win. And the benefit for us is that once you refinance and we cash all of those people out, now we own 100% of the deal.
So that’s our goal with this one is, pay out some really good interest for the first three years, our cash will be pretty tight over that timeframe because we’re paying 15% interest, but assuming we can refinance into something below 10%, it’ll be a good deal for us to long-term.

Ashley:
I feel like we need to do a Rookie Reply on this soon, talking about the pros and cons of doing it this way compared to raising money through a syndication for a deal like this. Okay. So let’s, producers are you listening? Let’s put a bookmark on that for a Rookie Reply episode.
But today, Tony and I are still fangirling over today’s episode guest. So we have Ava Yuergens and she is going to blow your guys’ mind. She is 17 years old, has two investment properties. She’s going to tell you exactly how she did it. Of course, not all of you are going to have this option, but there’s still going to be a large majority of you that do as to getting started this way.
But hopefully it can also kind of get the wheel spinning that for those of you that are 15, 16, 17, 18, give you ideas as to ways you can get started so young or somebody you know. I think giving them some of the books she mentions when they’re in high school, when they’re in college to get them turned on to this way of living.
But she is just a very impressive, amazing girl and she talks about, she has a long-term rental and a short-term rental. She’ll talk about how she uses software and the things she uses to manage her short-term rental. Also, very knowledgeable in finding her markets as to where she’s investing too. So she’ll kind of talk about the three P’s there.
Ava, welcome to the show. Thank you so much for joining us. Can you start off with telling us a little bit about yourself and how you got started in real estate?

Ava:
Yes, of course. Well, hi, my name’s Ava Yuergens. I started a real estate investing company with my now fiance, Ben, when we were 15 years old and now we’re 17 with 900K in residential real estate.

Ashley:
First, let’s clap. That’s amazing.

Tony:
Yeah.

Ava:
Oh, thank you.

Tony:
When I was 15 years old, I was working at Finish Line part-time, making $5 and 75 cents an hour, something crazy like that. So that’s super, super impressive, Ava.

Ava:
Thank you so much.

Ashley:
So let’s start from the very beginning. What even intrigued your interest about real estate investing?

Ava:
Yeah, of course. So it’s kind of a funny story. So I was actually sitting in history class, my sophomore year of high school and my teacher started presenting about a guy named Andrew Carnegie, and if you guys don’t know who Andrew Carnegie is, he invented the company, the Carnegie Steel Corporation, and basically it was a cool rags to riches story and he was basically the Elon Musk or the Jeff Bezos of his time.
And just hearing about him and what he did with so little, just really inspired me and I kind of knew after that I really want to be great, I want to do something great with my life. So after class I searched up something so dumb on Google Books to be successful or something like that. And of course, the first one that popped up can guess it was Rich Dad Poor Dad.
So I forced my sister after school that day to drive me to Target because I was 15, I didn’t have my license and she did. And then the day I actually, we got home from Target, and as I opened the door, my dad is at the top of the stairs. He’s never home from work at 3:00 PM when we get home from school.
But he’s at the top of the stairs with a mask, and it turned out everyone in my family except me had COVID, but I had to quarantine anyway with them, which is so dumb. You have to quarantine with people who had COVID, but it was a close contact, so I couldn’t go to school.
But essentially that quarantine gave me the time to actually read the book. And then after I read that book, I found BiggerPockets, I just went down the whole rabbit hole, read all the books, started listening to all the podcasts, started attending the local REIA, and it was all kind of history from there.

Ashley:
I had to read a Dale Carnegie book when I was in high school, is How to Win Friends and Influence People, and I did not appreciate that book at all, until I think I was in college when I read it again.
One of my friends, actually my first business partner was like, “You need to read this again.” And then that’s where I saw the huge value of, only I had been as smart as you when I was in high school and really appreciated the value of that book.

Tony:
Ava, do your parents preach entrepreneurship and wealth building? Because so many kids have heard about Andrew Carnegie in high school, but most of them are probably not going to go out and buy a Rich Dad Poor Dad afterwards. So I guess what was the home life that maybe made you think a little bit differently than most sophomores in high school?

Ava:
So my mom is a teacher, so this definitely, she was never on an entrepreneurship or business route, but my dad had a sales job for most of my life, but then when I was around 10, he ended up starting his own company. And so I got to see entrepreneurship and business with my dad.

Ashley:
Was this kind of the same path for your boyfriend, now fiance or were you the one that kind of convinced him as to getting into this entrepreneurial spirit?

Ava:
So Ben, he has had a lawn care company since he was 13. So he was always kind of just into having his own business and making his own money because we’ve both, we’ve never had jobs before. I’m unemployable by anyone, aside myself. That’s what I always say.

Ashley:
As long as you know that about yourself and found it out early before you spent so many years trying different jobs and realizing you hate it. So you’re lucky that way.

Ava:
Definitely.

Ashley:
Well, that’s amazing that he was 13 and started that business. So what was the first conversation when you guys decided you’re going to invest together? How did that happen?

Ava:
Mm-hmm. So basically I obviously was the one to read Rich Dad Poor Dad, and I was like, “Ben, just read it. Just read it.” But Ben’s not going to read a book. So basically I ended up just having to sit down with him and explain everything. And looking back on it, it might have been more forceful of me, but Ben loves the idea of building wealth and even if it is boring, he is willing to do it.
So I wouldn’t say there was any convincing involved, but I was definitely more of the one, “Okay.” If you ever read the book, Traction, “Okay, we’re going to have our Sunday meetings. We’re going to do this, this, this, this week. I need you to cold call these people this week.” So it was always, I was more of the boss, but he was willing to do any of the work that I needed him to help me with.

Tony:
So Ava, I’m so curious. So you guys had this conversation about, “Let’s become real estate investors.” But you’re pretty young, most people at your age can’t really afford to buy real estate. So after you guys made the decision to say, “Hey, this is what we want to do.” What was the next step to actually getting that first deal and eventually get into almost a million dollars worth of real estate?

Ava:
So I can step-by-step explain the first deal because I feel like it best showcases how we did it. So obviously, the first thing we needed to do was just figure out the financing. So luckily because my dad’s a business owner, he gets to make his own money in a way, and it’s allowed him to save up a lot of cash on the side.
And so he agreed, him and my mom agreed to partner with me and Ben, which I’m so grateful for because it’s a lot if, you have to put a lot of trust in your 15-year-old kid to handle that amount of money. But basically what we did is the partnership, we ended up using for our first deal was a 50/50 partnership. And essentially I’ll explain later how we did it, but if you think about it like this, you have the down payment, the closing costs, and then the repair costs. If you add that all together, that’s all the costs you have to pay up front.
Me and my parents essentially split that in half, and me and Ben paid half and my parents also paid the other half. So now for our first year, we’ll split the profits 50/50, but I’ll get into how we kind of made that money. But before we even found the first deal, we figured out the financing. So we agreed on that partnership and we got that in writing. Then me and Ben decided to go the off market route when finding a deal.
So we did the cold calling, we did the direct mail. Before school, I would get up at 3:15 every morning and just write out direct mail for direct mail, because I was so frugal at the time. I didn’t want to spend money on any direct mailing apps so I just wrote it out, and then after school, me and Ben would pretty much just cold call for hours on end, until we couldn’t do it any longer.
But after three months of hard work and dedication, we actually got a deal under contract. And over those three months we were able to get our half of the down payment, closing cost, repair cost, by something called couch flipping, which you guys might be familiar with. It’s a great side hustle.
But essentially you find a couch on Facebook marketplace, OfferUp Craigslist, you buy it, you clean it up, and then you resell it for a higher price and you’re able to make 200 to $500 an hour with this method, but of course it’s not in your own time, which kind of sucks. But over time, over those three months, we were able to raise our amount of the down payment, closed cost and repair costs.

Ashley:
That is crazy. That’s amazing. But you are right about it, that’s very time-consuming. When you find a couch, you got to go and clean it and take care of it.
Were you guys doing all of this yourself, going and picking up the couches for sale, cleaning them yourselves, and then were you delivering them to people too once they bought it or were they coming to get them? But you still had to meet the people, I’m assuming?

Ava:
Yeah. So basically some people would have us deliver and if we did deliver, we would just have them pay a fee, because everyone has a pickup truck or is going to rent a U-Haul, and then some people just took it themselves. But if you’re delivering it, you got to charge extra. Okay?Don’t miss out on the extra cash.

Tony:
Well, I don’t want to turn this into a couch flipping episode, but I am just curious, so how were you sourcing these couches and then what kind of work did you have to do to get them ready for the end buyer, and how much would you typically make on one couch flip?

Ava:
Mm-hmm. So I’d say the average cost or the average profit we’d make on a couch flip was around 250. And that would take anywhere from 30 minutes to an hour because we just mainly stick to our area. So we didn’t have to drive that far or anything.
But how I mentioned how me and Ben, we both agreed to do this, but what I had him do was he mainly did the couch flips and I mainly did all the real estate stuff and that’s just, it was easier for both of us because both of our parts were essential, but we both didn’t enjoy each other’s part that much.

Tony:
So you said 30 minutes, so does that mean you guys were literally buying a couch on at two o’clock and then reselling to someone else at 2:30? The same exact couch with no changes to it?

Ava:
So we have sold many couches without cleaning them because sometimes I say we clean them, just to sound like a better person, but sometimes it wasn’t necessarily, it’s sold in 30 minutes, it was just the time that we were actually working was probably 30 minutes added up altogether.

Tony:
Got it, got it. That’s so cool. We’ve been talking about this for a while as having a side hustle episode where we talk about all the different ways, people can side hustle their way towards their down payment.
So Ava, you and Ben used couch flipping to fund your 50% of the down payment in the closing cost for that first real estate deal.

Ava:
Yeah. And it’s super effective because we in the end, were able to raise our half, which was 20K in three months.

Tony:
Wow.

Ava:
Which is great, especially if you’re a teen. I mean, it’s just such a great way to raise money.

Tony:
We got to stop there for a second. Because there are so many adults who can’t save $20,000 in three months, and the fact that the two of you as teenagers were able to do that proves that there is no excuse as to why someone who has a car, a job and the means shouldn’t be able to replicate that same thing. So I am so incredibly happy that you guys shared that story.
Ava, so I also want to talk about the cold calling piece because you said you were up before school, cold calling and after school doing all this work. So cold calling can be a very nerve wracking thing for a lot of people. You’re calling on strangers that have no idea who you are. So how did you, I guess, learn the ropes of cold calling and what did your script kind of look like as you started to make those phone calls?

Ava:
So how I crafted my script was I just went on YouTube and just watched a bunch of people’s videos explaining what they say, why they say it. And then with that I just took a bunch of pieces of theirs and kind of just made my own. So that’s how I made the script.
But of course with cold calling, I was so nervous in the beginning and honestly still today. If I ever jump on a Mojo Dialer session to go cold call people, I’m still shaking for the first hour. But just imagine 15-year-old on the phone like, “Hey, can I buy your house?” Yeah. So it was definitely a nerve-wracking experience and I definitely would say cold calling is not fun to anyone unless you’re really strange.
But it was more just mentally, that was probably one of the hardest things I did, especially because you’re getting rejected thousands of times before you actually get your first deal. Some people say terrible things and I understand you’re kind of probably bugging them, but you still don’t need to say bad things.
But I’d say it was just probably, it kind of made me grow up in a sense, real estate in general made me grow up at a teenager and it made me more of an adult. And I’d say cold calling was especially one of those things because you have to feel out the caller, who you’re calling on the other end of the line, how they’re feeling, what you should say. If it’s a sensitive, if it’s a probate call, you got to be really careful on how you say anything. So cold calling is definitely a skill that takes probably years to master.

Ashley:
Okay. So let’s go into that journey you’ve decided with your boyfriend, you’re going to buy a property you’ve saved up for the down payment. Walk me through that decision to purchase a property together, and then what did that kind of look like to find the property and how did you decide on what strategy you were going to do too?

Ava:
So originally we were going to wait till we’re 18 just because we’re not old enough to get a loan. And we weren’t really exploring co-signing or anything quite yet, but we both have severe ADHD and we’re like, “Okay, we got to start now. I can’t wait.”
So that’s initially just how we made the decision and just our goal in general, like any other couple is we want to build wealth together and we’re just so passionate about it and we love doing things young. I mean, just doing business young and doing cool things young. So honestly, that decision, it wasn’t hard.

Ashley:
Was there anybody that doubted you guys, like, “You guys can’t do this, you’re too young.” Or, “Don’t buy a house together.”

Ava:
Literally everybody.

Ashley:
How did you overcome that?

Ava:
Honestly, it wasn’t necessarily overcoming it. It was kind of just blocking those people out. And it was surprising by how many, even family members didn’t even believe in us and obviously our friends thought we were crazy.
And as I said earlier, it’s not necessarily overcoming it, it’s just blocking those people out because at the end of the day, you know yourself the best and if you know you can do something, you can do it and you shouldn’t let other people’s opinions affect you.

Tony:
Ava, I’m curious because one of the biggest challenges for new real estate investors is the lack of community, where it feels like you’re kind of on this island by yourself. And I wonder, did you and Ben feel that same feeling of being alone? And if so, did you guys take any steps to try and find that community of other real estate investors that you could connect with?

Ava:
Definitely just being so young, it wasn’t something we could talk to our friends about ever or even our families because none of our families have invested in real estate. But I definitely say we found a lot of people at our local REIA, which was nice, but again, you only meet with them once a month.
So you have to go out of your way to ask people like, “Hey, do you want to meet up for lunch this weekend?” Or, “You want to go check out this property together?” So yes, it’s super easy to feel alone, but you yourself have to go out and find that community because it’s always there in every single market.

Ashley:
Okay. So you guys are still going forward, you’re blocking everybody out. How are you going to buy this house when your not 18, you can’t get a loan, I’m assuming you probably don’t have any kind of credit history at all.

Ava:
Yeah.

Ashley:
Yeah. So how did you guys do that?

Ava:
Well, actually we again, decided to go with our parents and get a loan with them and then also split the down payment, closing cost, repair cost. So I guess that’s how we went about that.
And as actually for the credit, something that anyone can do for their kids or if you’re a teenager listening to this, I actually do have a credit score even though I’m not 18 yet. It’s because I became an authorized user on my parents’ credit card, and essentially when you become an authorized user on someone’s credit card, you get their credit score.
And so you have to make sure you go with someone who has good credit, but you don’t even have to, you have a credit card, but you don’t have to spend anything on that credit card.

Ashley:
So with this partnership with, is it both of your guys’ parents then?

Ava:
No, it’s just mine.

Ashley:
Just yours. Okay. So it’s the four of you. And then how did you work that out on the mortgage? Are your parents just on the mortgage? Did you guys do any kind of written documentation? What does the kind of partnership look like? Who’s responsible for what?

Ava:
Yeah. So basically we had them put their names on the mortgage, just because obviously you have to be 18 to have your name on a mortgage. But we actually did transfer our property into an LLC, which I do want to say the due-on-sale clause is a thing, so that’s not me advising you to do that but we took the risk, we’re good so far.
So my parents are members on the LLC because again, you have to be 18 to actually have your name on that. But on my birthday I’m getting a call from my attorney, it’s scheduled to have my name switched on the LLC and me and Ben will become the members.

Ashley:
Can you explain that a little more, the due-on-sale clause and what that process looks like of buying the property in a personal name, getting the mortgage and the personal name, and then going and switching it into the LLC and just what are some of the pros and cons of doing that?

Ava:
So we always kind of wanted to buy in an LLC, but obviously the terms are more favorable that you can get on the loan if you buy it in someone’s personal name. So we did is we had, my mom and dad get the loan and so it was in their names, but then we decided to create the LLCs with our attorney after. And the attorneys can handle the whole switching the name process and they can handle that, but the risk is of course the due-on-sale clause.
And I’ve heard maybe one or two times where it actually has gotten called on, but they were able to resolve it with an attorney, but again, that’s not me advising you to do it. I’m sure there’s plenty of horror stories to do with that.
But essentially what the due-on-sale clause is, if you switch it over and the bank finds out, they can say, “Oh, all of your loan is due. In the next 30 days, you have to pay it over.” So essentially if you get caught, you might have to pay the rest of the loan in full, right then and there.

Tony:
Yeah. I think Ashley and I both, a lot of people have heard the due-on-sale clause. I personally have never met anyone that’s actually had that triggered, and I’ve known quite a few folks that have moved tattle over to LLCs. But like you said, Ava, it definitely is a concern. Might I just mention that you handle that appropriately.
Ava, I want to dig a little bit more into how you are splitting up the duties and responsibilities on that first deal. So obviously your parents helped with the mortgage application and 50% of the capital that was needed.
What about actually finding the deal? Sounds like you guys found it through your cold calling, but everything that comes after actually owning the property, how are you guys splitting up those duties and responsibilities?

Ava:
Just because my parents have obviously closed a house before, they were kind of right at our side teaching us and showing us, every time they had to sign a document, my dad would call me downstairs and be like, “Okay, Ava, watch me sign this document and you’d explain what it is.” So it’s honestly super helpful just having someone who’s actually bought a house before, and so he was a huge helper on showing me how to sign everything and just all the process that comes with it.
But when it came to pretty much everything else, calling the insurance company, making sure that’s set up and figuring out property management and stuff, that was all me and Ben, because obviously they haven’t invested in real estate before, but I’ve read all the books, so that fell all on us.

Tony:
Yeah, I love that. And people ask all the time, “Tony, Ashley, what’s the right way to set up a real estate partnership?” And our answer is almost always the same, where there is no right way or wrong way as long as both sides are happy.
And it sounds like for your partnership with your parents, it was more so they were bringing the capital in a little bit of the guidance, but yet you and Ben were doing all of the legwork. And even if that’s not a parent and a child relationship, but just two separate investors, that could still very much be a win-win situation. And there are countless partnerships that have that exact same structure.
So many properties in my own portfolio, I have partners that brought all the capital and carried the mortgage, but we found the deal, we set it up, we managed it long-term, we split the profits down the middle and everybody’s happy because all they had to do was sign some docs and wire some cash and we did everything else for them. So it definitely can be a win-win situation when you set it up the right way.

Ava:
For sure.

Ashley:
One question I do have is, what would be your advice if somebody is in your position and they want to pitch to their parents this investing idea? How should they present it to their parents? Maybe they’re unsure that their parents would actually say yes.
What’s some advice you can give that maybe you notice when you talked to your parents about this that they were eager to go ahead and help you with this?

Ava:
Yeah. So of course, again, I’m so thankful because I have super supportive parents, but essentially what me and Ben did was we created a slide deck basically explaining start to finish, how we would find the property and then after the fact what work we would do and what would we need them to do and how the numbers would kind of work.
But it really closed the deal once we actually found the property and showed them the numbers, that’s when they fully agreed, to work with us because obviously at the end of the day, the deal then the money they’re going to make is the most important thing.

Ashley:
And the fact that you wrote it down and you showed them too, and it wasn’t just like, “I know what I’m doing, I know I can do this, I’m just talking.” I think really showing them the numbers and breaking it down is really great.

Tony:
And Ash, I think that’s a valuable lesson for all of our rookies. If you’re looking at raising capital from someone else, obviously if it’s someone you have a really good relationship with, maybe you don’t need to do this.
But if it’s someone that’s maybe a newer connection, giving them something tangible to read, digest and understand, really helps them grasp both the value that you’re going to bring and the value that they’ll get out of partnering with you on that specific deal. And Ash, I mean you’ve talked about yours before, but you did a presentation for your first partnership too, right?

Ashley:
Yeah. So I used to make these binders. I’ve physically print everything out, put them into a binder when for private money or for partners and it’d be my deal analysis, BiggerPockets, calculator reports, everything. And I’d give them a binder and me, a binder and we’d sit there over coffee and go through it all. And now you can just email stuff, but I just thought it was more efficient to hand these old guys a copy of the binder to go through.
But also thinking about that too is who is the person that you’re delivering that pitch, that speech to too? What’s easier for them to understand and comprehend a physical copy of something, actually seeing it and visualizing it. Maybe it is them just hearing it and you talking about it, or maybe it is sending them a Google Drive folder with all of the information in it and them sitting down at their own time going over it.

Tony:
Ava, I’m curious, have you used that same pitch deck for any other opportunities or was it just that one time with your parents?

Ava:
So that specific pitch deck I only used with my parents, but when I did acquire my short-term rental, I pitched to a bunch of different investors with a new slide deck I made.

Tony:
Interesting. Let’s talk about that a little bit. So you guys obviously do well with this first deal and then you stumbled upon the second property. So tell us about the second deal. How’d you find it? Was this another off market deal? And walk through how you kind of put the financing together to close on this one.

Ava:
Yeah. So actually for this one, I’d love to go step-by-step on how I acquired it and the whole process that it’s applicable to anyone. So teenager or not, you can do this no matter what your age is or how much money you have.
So I guess going into the second deal, since it was new asset class as a short-term rental, I needed to educate myself. And whenever I do go into a new asset class, I always find the best book that everyone recommends about it. So in this case it was Short-Term Rental, Long-Term Wealth by Avery Carl, which is a BiggerPockets book, I swear I’m not biased. It was so good.
She talks about how to acquire the property and then after the management side of it, and then I also went on to YouTube for education. And you have to be careful on social media because a lot of the people who are posting about real estate in general, specifically tend to, it’s sometimes they’re more about the money than actually offering people value. So you have to really seek out the people who are providing value over money. And there’s two YouTube channels that I love.
So Tony, I’m going to pretend you’re not here, but I love Tony and Sara’s YouTube channel, The Real Estate Robinsons. I swear this sounds so biased, but it’s not. But I love their videos and I think my favorite video was the messaging template video you did for the automatic, that was so helpful. And again, that video’s not going to get millions of views, but you still posted it because it was valuable, which I really appreciate.
And then also Robuilt, so Robert Abasolo who is the co-host on the BiggerPockets podcast. So that’s step one, educating yourself. And then step two, is what I love to do is make a step-by-step to-do list of exactly what I need to do to acquire this property.
So for short-term rental, I just wrote that all out checklist form, and then I just write a date next to each step. What date do I want to find an agent? What date do I want to choose what market I’m in? So then you can be like, “Okay, in 60 days I should have a property by then.” And then the next thing I did was figure out financing. So this is where the pitch deck kind of comes in.
I made my slide deck and we actually had, me and Ben had a business class and you had to make up a business. So we did the Airbnb thing and that’s where we actually originally made the slide deck. But it was super intense because we had a business competition and 60 kids were in this class and we had to present our presentation. And if you won, you didn’t have to do any more assignments the rest of the year. And we won, with our amazing slide deck. So that was awesome.
So we use that pitch deck on people just at the REIA because there’s a bunch of investors there. And it was kind of mortifying because it’s easier to pitch to your parents than to these investors. But after about 20 people, we finally got someone to say yes, but it wasn’t humiliating. It was just really scary, especially getting rejected in person, because all of these were in person.

Tony:
Ava, I just want to pause here for a second. So you said that you pitched it to 20 people. Was this you standing on stage, pitching to an audience of 20 people or were you one by one pitching to 20 different people who said no?

Ava:
So for the one I did in class, we actually had 20 business owners come in and we pitched to them. And then when I did it just for my own personal Airbnb reasons, I pitched it to 20 people separately.

Tony:
So I want to talk about how you initiated that conversation to pitch it to those people separately. These were people you had met through the REIA I’m assuming, but how did you actually set up the call to say, “Hey, I want to pitch you on this next deal that I’m working on”?

Ava:
Yeah. So first I just went around the REIA, I asked around and wrote down who all the investors were, got their business cards or information. And then individually I would just reach out, set up a meeting, reach out, set up a meeting, because honestly, I didn’t want to set up more meetings than I had to.
So I do one by one, which is kind of tedious, but after a couple months I finally got someone to say yes. So this wasn’t something that happened in a week. It took a while.

Tony:
So one theme that I’m noticing, Ava, is that you have a very high level of determination and you do well with rejection. That first deal that you and Ben got from cold calling, how long did you have to cold call before that first deal came through?

Ava:
Yeah. It was five hours every day for three months.

Tony:
Five hours every day for three months. You talk one-on-one with 20 different investors and hear no, but yet you keep going to find that 21st. There is so much value in that little nugget of the episode alone because there are so many investors or aspiring investors who after that first, not even the first rejection, just the thought of that first rejection, they’ll stop or they won’t move forward or they won’t take that action because they’re just afraid of that first rejection.
You got rejected for three months straight, for 20 conversations straight, but you didn’t let that stop you. So I’m just so incredibly happy that you did move forward because that is such a big lesson for our rookie audience.

Ava:
And something interesting about that, is I’ve started other businesses other than real estate and getting rejected so much in real estate and then moving to marketing and other businesses, real estate is honestly, I think it’s the best business to start because you have to market like crazy to get a deal. But if you take that same amount of marketing you did into a different business, a lot of the times it is so much easier.
I did not realize how much you had to, I wouldn’t say harder because that sounds discouraging, but real estate, you have to try really, really hard to get that deal because a deal is life changing.
I mean in other businesses, if you market and you get a client it’s not necessarily life changing. That’s why it should be hard, but just applying it to other businesses, it’s crazy how real estate has still helped me so much in business in general.

Ashley:
That’s really cool to hear, and that’s interesting as to that progression of taking things that you’ve learned from one business and easily implementing them to another business instead of like, “Okay, this is a whole different industry, I’ve got to start from scratch again.”
And really taking those tools and I think that’s what a lot of our listeners have to realize are things that you’re doing in your nine-to-five W2 job that you may hate now. There’s got to be at least one thing you can take and implement it to give you that leg up, that advantage in a real estate business.

Ava:
Also, to mention the financing we did for the short-term rental, this is what I pitched in the slide deck is, it’s kind of similar to what I did before. Avery Carl mentioned this in her book, but it was essentially taking the down payment, the repair costs, the closing costs, adding that big chunk of money together and splitting it.
So that’s kind of the same thing we did. But we’re the investors, they would get the loan, so the money partner. They would get the loan and they would pay all that money up front, including our half. And then us, we are the sweat equity partners. We would do all the work to all the management, get the things set up, and then we’d take any profit that we made from the Airbnb and start paying down our half.
And we got this in last May, so we’re almost done paying off our half with all the profit, but once our half is paid off, we’ll revert back to splitting. We’ll revert back to splitting the cash flow 50/50. But the reason I say anyone can do this is because we don’t have any money in this deal and we use partners so it didn’t really matter our age.
So that’s why anyone can do this method just with that partnership. I’m not saying this, it was a very hard deal for define for that reason to make this partnership work, but it is possible and it does show that anyone really can do this.

Tony:
Yeah. That is so incredible, Ava. There’s so many investors who don’t necessarily have all the capital they need to grow their portfolio, but you’ve just displayed in an incredible way, that as long as you focus on building your network and providing value to other people, there’s a good chance you can find someone that has the capital to fund your deals.
And the structure you use, it’s another great way, right? It’s like the first deal you did with your parents. It was just kind of you put up half, they put up half, you guys split everything half. This deal, this other partner brought everything to the table, but you worked out a way to repay them with the cash flow.
There’s so many creative ways you can structure a partnership to still make it a win-win. Just out of curiosity, Ava, where’s that short-term rental at? What city in? What city is it in?

Ava:
Yeah. So that actually kind of leads to my next step, which is choosing your market. So I know you have one there, but I have one in the Smoky Mountains of Tennessee. And the reason we chose that market is there’s so many reasons.
First off, the policies were great. The economy relies on short-term rentals there to make money and then also the price, so it’s gotten really competitive, we’ll just say that. But we were able to get a deal that made the numbers work.
So you got to make sure the average daily rate along with the medium home price and the occupancy rate, you got to make sure that works. So using sites like AirDNA for example, that’s kind of where we found the numbers. And then, I’m trying to think, policy, price, what is the third P? Popularity.

Tony:
Popularity.

Ava:
That’s it. There you go.
So there’s Smoky Mountains, number one most visited national park in the US. So obviously it was a great place because a lot of people are going there and national parks, they will never die. People will always love them unless the world all catches on fire, so they’re safe. I say they’re a safer area, it’s completely safe.
But then the next step was kind of just determining the property criteria, so how many beds and baths we wanted and then for the Smoky’s, you want a cabin, obviously you wouldn’t want a modern house there, that just wouldn’t make sense. So the cabin, number of rooms, just and also we wanted one with a hot tub already because a lot of people like hot tubs there, the guests that come. And then after that we needed to figure out how are we going to find this deal.
So we ended up using an agent and going on market. And when you do go for an agent, I recommend finding someone who has a deal on that market. The agent has a deal, and no short-term rentals in that market because it’s always nice to have someone helping you and confirming like, “Oh, this would make a great Airbnb.”
And then the next step is honestly just finding the deal. And basically I think, trying to think, my goal was just to find a deal before I turned 17 and we got it under contract three days before I turned 17. Sorry, I did it, but it took probably two months of waking up early every day, checking out the MLS, analyzing a bunch of deals before we found the one where the numbers were right.
But after that, after you closed, it’s basically just setting up the property, getting it automated with all the apps and softwares. But that’s pretty much start to finish, how we did it.

Ashley:
I just want to say, and Tony and I have a separate little chat thing that we do, as to who’s going next or whatever we did or what should we talk about and we’re in there just hyping you up. It’s, she is explaining, analyzing a market better than some of our grown adult guests. Come on here. This is amazing. So would you be interested in talking deep into the numbers on one of the properties?

Ava:
Yeah. The one I probably know best is my first deal, the long-term rental.

Ashley:
Okay. Let’s go into that. I’m going to spit some rapid fire questions at you and then you can kind of go more into the story of how that worked. So what was the purchase price?

Ava:
So the purchase price was $175,000 even.

Ashley:
Okay. And what market was it in?

Ava:
It is in the Greater Milwaukee area.

Ashley:
And this was you did a mortgage with your parents on it?

Ava:
Correct.

Ashley:
And what kind of mortgage was it? Was it the 30-year fix, conventional?

Ava:
It was an investment, I believe it was an investment property loan. It was 25% down and the interest rate was four. Looking back, we probably could have gotten better just because when we bought it was at the time where interest rates were like three. But my dad was honest, he said it was an investment property, so that’s kind of loan we got.

Ashley:
Yeah. Well that’s not a bad thing at all. And then is it fixed for 30 years?

Ava:
Correct. Yeah.

Ashley:
Yep. Okay. And then how did you find this deal?

Ava:
So again, B found this cold calling. I will give credit to Ben. It was his cold call that got the deal. He’ll never let me forget it.

Ashley:
There you go, Ben. She gave you credit. Okay. And then what was the rehab needed on this property?

Ava:
So actually this is super interesting. So the property is over a hundred years old. And while this deal was off market, we still worked with an agent to close it just to make sure we’re doing everything right.
And when we got the inspection report back, the agent said, “This is the best inspection report I’ve ever seen.” And the house is a hundred years old, it needed $200 in repairs. It was crazy.

Ashley:
Okay. So you want to kind of go into a little bit. I know you’ve touched on it throughout the episode, but was there anything that kind of stood out to you about this property?
Anything that failed or that you just weren’t aware of? Something that went wrong? Huge success. I mean, I think only having $200 in repairs for the property was a great success. And then also kind of wrap it up with what your cash flow is.

Ava:
Yeah, of course, so I guess we can just go right into the numbers. So it was already a rental previously, so we had inherited tenants and essentially since it was 25% down, our mortgage was a little bit lower, but the final numbers look like this. So it’s a duplex. So there’s two units and our final rent, our rental income is around 2100. Our mortgage payments plus expenses, insurance taxes is around 1500.
We do not have to pay any of the utilities just because our market that we’re in, it’s just law. You don’t have to do that. You have the tenants pay it. So we have about $600 a month in cash flow and then we split that in half with my parents. So we each get 300. And something about this deal is, that’s kind of funny I guess, is me and Ben decided to take on the property management role of the property. And just at the end of the day, being 16 and being a landlord, no one takes you seriously. So that lasted about two weeks.
So we were inheriting tenants and we had one encounter with them because their lease was ending, so we had to renew it. And so I just remember that day getting ready, I put on a suit, put on makeup to myself look older, I’m literally with the suit. I wore sneakers, so I don’t even know what I was trying to get at here.
But I remember getting into the property, my hands were shaking, clammy too, I was sweating. But we sat at their kitchen table and I’m going through this rental agreement that we drafted up with our attorney and getting to the expectations and the rules part, and I’m getting through these so quick because I just want to get this over with.
And I started saying, “Oh, there’s no smoking in the property.” And then as I say that, I literally, my ice dart to the ashtray on the table and it was the most awkward experience for my life. I was staring at the tenants, staring at the ashtray and it went silent. Let’s just say they did not sign the lease. They’re not our tenants. We never continued that with them.

Ashley:
So what happened? Did they move out the next day?

Ava:
Okay. So their lease expired in two weeks. So we basically, I just didn’t know what to do. So I just kept reading the rents for agreement. And then originally we were going to have them sign it there, but I just left it at their house. I’m like, “Yeah.” And let’s just say they ended up moving out.
But never again, we hired out property management and I do not regret it. Honestly, it’s been so seamless because we interviewed a bunch of people, but it was mortifying.

Ashley:
So did you include a property management fee when you ran your initial numbers on it?

Ava:
Yeah, I did because we were going to pay ourselves to do the property management. So yeah, we did.

Ashley:
That is so smart. And that’s what I wanted to hit at, is that even if you’re going to self-manage to start, is to run the, put that number into it in case you ever decide to outsource management.
And I love that even more is when you are paying yourself to do it because you had partners, your parents, and you guys are doing the self-managing, not your parents, and it’s not fair you’re doing that for free while you’re splitting the cash flow evenly.
And any of my business partners, we did the same thing too. When I was managing, I would take an extra pay, out a cut for doing the property managing on the property if they weren’t doing anything. So smart. And then what about the short-term rental?

Ava:
For management purposes?

Ashley:
Yeah.

Ava:
Okay. Yeah, so just with all the technology and the Airbnb softwares, we personally decided to manage that and we use a ton of different softwares and literally, I probably work on my Airbnb because I only have one, it’s maybe 10 minutes a week.
We have automatic messaging, saying the guests giving them the code and the directions of the property. And we also just have automatic things with our cleaners and it’s just, it’s so nice. You just have to put in the work to do the research to figure all that stuff out. But once you do, I recommend you go that route because you don’t want to be paying 25, 30% in short-term rental management fees because it really adds up.

Tony:
Yeah. I think it’s interesting, right? I know a lot of people who have property managers for their long-term rentals, yet they self-manage their short-term rentals.
And it’s weird because you think that it would be the other way where people would be more willing to self-manage their long-term because it’s one tenant, one person. But the short-term rentals, I think there is an element because there is so much automation and so many things you can do to where it is easier to self-manage those in a lot of ways.

Ava:
It is.

Tony:
That’s awesome. And sorry, I know you mentioned this, but can you just restate it one more time? What’s the cash flow that you guys are getting now after the management fees on the long-term rental?

Ava:
On the long-term rental, we’re getting about $600 and then we split that 50/50, which 300 each.

Tony:
Not bad. Not bad at all. Cool.
Well, anything else from you, Ash on this deal or should we hit the exam next?

Ashley:
Yeah. I think let’s go to the exam. So we have three questions for you today, Ava.
The first one is, what is the one actionable thing rookie should do after listening to this episode?

Ava:
I would say, first, you need to determine an asset class you want to do, and then you need to educate yourself on it and make that step-by-step checklist. Because once you have that checklist and it’s so much, because it seems so crazy when there’s a whole bunch of things, you’re like, “Oh, I have to do this, I have to do this. I’ve talked to insurance people.” But if you just lay it out on a checklist step-by-step in front of you, it cancels out all the noise because all you have to focus on is that next step. And if you have due dates by it, it’s great for setting goals.
So I recommend just figuring out what asset class you want to do and just choose one, whether it’s multifamily Airbnbs, arbitrage, anything, and then make that checklist with a step-by-step, actionable steps that you can take.

Tony:
Love that answer. All right.
Question number two, actually before I ask this question, so did you graduate from high school already, Ava?

Ava:
So technically I should be a senior, but I graduated my junior year, not because I’m extra smart, but just because I took the credits I needed to on time.

Tony:
Got it. All right.
So my next question then is what’s one tool, software app or system that you use in your business?

Ava:
So the one software I choose would be Guesty, it’s basically an Airbnb, it’s a system that covers pretty much everything for your Airbnb. It has automatic messaging on there. You can connect your schlage lock to make new codes for each guest on the door lock.
It’s just an all-in-one platform where you can see all your bookings, because let’s say you have a listing, you can post on Airbnb, but you can also post it on Vrbo and all the other booking platforms. And it will basically give you an overview of all those platforms together in one.

Ashley:
Okay. And our last question is where do you plan on being in five years?

Ava:
So I, right now have another business that has to do with helping people build their personal brands with short-term content on social media. So right now I’ve been super honed in on that business to get capital for bigger multifamily deals, because after exploring a bunch of the asset classes, I realized I don’t like flipping. My heart lies in multifamily and it will forever ever.
So I’ve been basically just trying to hoard money to buy those properties myself this time because I love the idea of using investors, but it’s a lot less stressful when it’s just your own money because I never ever want to lose someone else’s money.
So basically I’ve been focusing on just building up a lot of cash for that. But then also at that point, I think my biggest goal in life is to be buying businesses, whether they’re real estate businesses or not. At the end of the day, cash flow is cash flow and I think buying businesses is a really great way to do that.

Ashley:
Hey, awesome.

Tony:
All right, cool. So before we wrap things up, I want to give a shout to this week’s Rookie Rockstar. This week’s Rockstar is a name you might know. So if you’re active in the Real Estate Rookie Facebook group, you 100% know this name. He’s also a previous guest. I always forget his episode number, but you can look him up.
But this week’s Rockstar is Kevin Christensen and Kevin says, “This is what it’s all about. Ricky’s my 19-year-old daughter and her 19-year-old husband just closing their first investment property. At 19 my wife and I were horrible with money. My wife and I didn’t buy our first investment until we were 36. I cannot imagine where my kids will be at 36, armed with the knowledge that they’ve gained over the last few years.” And that he’s super proud of them.
But he finished it off by saying, “Never have I more felt the old adage, feed a man once and he’ll eat for a day. Teach a man to fish and he’ll eat forever.” All right, so Christian, Kevin Christensen. We love that man. And congrats to your wife and your son-in-law for that amazing first real estate deal at 19.

Ashley:
And Kevin’s episode was episode 51, if anyone wants to go back and take a look at it.
Well, Ava, thank you so much for coming on to the episode with us. We really appreciate it. Can you let everyone know where they can reach out to you and maybe ask you a couple questions?

Ava:
Yeah, of course. So on every social media I’m at @avayuergens, that’s A-V-A, and then the last name is Y-U-E-R-G-E-N-S, and that’s Instagram, TikTok, YouTube, everything.

Ashley:
Okay, awesome. Thank you so much. You definitely brought a lot of value to this episode and I hope everyone learned a lot, but talk about a huge inspiration and that’s what I love so much about being a host on this podcast that after these recordings I get so motivated and inspired. So thank you so much for sharing your story with us.

Ava:
Thanks for having me, guys.

Ashley:
I’m Ashley, @wealthfromrentals and he’s Tony, @tonyjrobinson on Instagram, and we will be back on Saturday for a Rookie Reply. (singing)

 

David:
This is the BiggerPockets Podcast show 741.
The reason you’re feeling bad is might be ego. You’re looking at other investors that are making money. You’re looking at your balance sheet every month and you’re saying, “Well, I’m losing money. I’m doing it wrong.” Maybe not. Maybe this is how real estate has always worked over time. It was the people willing to lose the short term to make money in the long term that worked. Now, I hope it doesn’t stay that way, but I am preparing for a reality where the golden age where you’re just bobbing for apples, you just put your mouth in there and you came out and you hope your apple’s bigger than the other apples, but you always got an apple, that could be over.
What’s going on everyone? This is David Greene here today with a Seeing Greene episode if you didn’t notice it in the title. If you haven’t heard one of these before, you’re in for a treat. On these shows, we take questions directly from our audience base. That’s right, you. I deal with the struggles you got going on, questions you have about real estate, clarity that you might need. Or when you have several options, which one would be the best? I love doing these shows and I love you guys even more for making it possible because you ask great questions, which lead to great shows.
Today’s show is fantastic. We get into what the person might be doing wrong if their property is not cash flowing right now. This is a great topic that we get into about ways that you can approach real estate investing as well as a small tweak that would make that property cash flow and how they can execute it. Should I take on an out-of-state rehab on my first deal? Things to be aware of if you’re going to invest out of state. I do a lot of that myself as well as renovation stuff, which I also do a lot of. And what you do when you can’t find cash flow in your market. Is it too late to invest in real estate? Should we stop listening to BiggerPockets and instead start buying NFTs again, cryptos, investing in tulips, buying Beanie Babies, maybe Pogs, if you guys remember that. Is that the future? Should we buy a bunch of that and wait to see if it comes back or is real estate still a good option? All that and more in today’s Seeing Greene.
Also, I just want to remind you guys, I forgot to turn the light on again. I’m really good at doing that, so as soon as this little segment ends, you’re going to see the light turn blue. Don’t get confused. It’s still Seeing Greene. It’s just going to be greenish blue. What are the colors when you mix green and blue? Is that like turquoise maybe? Seeing turquoise for the first 15 minutes and then it goes back to being green. This is just me being forgetful, guys. It ain’t easy being Greene.
All right, today’s Quick Dip brought to you by Batman is, we have a new show coming on the BiggerPockets YouTube channel where I’m going to be a frequent contributor. I’m going to be showing people how to make more money in their current job. This is something that I’m passionate about, I’m very, very into. Don’t quit something that you’re not good at and just try to find a new thing that you think you’re going to be better at without putting effort into the first thing. You got to pursue excellence in whatever you do. So if you want to be featured on that show or this one, go to biggerpockets.com/david. Write out your question and check the jobs box if you’d like to be on the YouTube channel. All right guys, that’s enough of me. Let’s get into our first question.

Nick:
Hey, David. My name is Nick Gutzman. I’m 19 years old and a sophomore at Colorado Mesa University in Grand Junction. I’m looking to purchase a single family property near my school to ideally lease the students. I’ve been consistent using Zillow and BP’s tools, but I can’t seem to find a deal with what current rates as well as supplies in my town. I’m struggling to take the next actionable step. My primary question is what are some tools or strategies you could recommend for finding a deal and what are some creative ways I could finance a deal? The lender I would likely go through told me I could expect a 7.5% rate from him. With that number, I’m struggling to find anything that pencils out and works for my situation. Thank you so much for all you and BP does. Have a great day.

David:
All right, Nick, thank you very much for the video. This is a common problem a lot of people are having, so don’t be discouraged. This is just the state of the market that we’re in right now.
Now the good news is the reason it’s so hard to find deals is because real estate is still competitive and valuable and people want to own these assets. Couple things that we can get into, 7.5% is probably a… That’s a standard rate, it’s where most people are. If you’re working with the lender and that’s what he’s telling, it’s probably what you’re going to get. If you’re trying to find a creative way to finance your deal, that just means you have to find the money from somewhere else.
There’s not a lot of people that have hundreds of thousands of dollars laying around that are going to be comfortable lending it to you for less than 7.5%, which means you’re probably only going to get that from the owner, which means you probably need some kind of owner financing, which means you’re either going to have to overpay for the property to make it worth it for them to give you the better rate you want, or you’re going to have to find a distressed motivated seller, which is going to be a lot of work, and frankly, going to be very difficult for you to do while you’re going to school. None of those sound super appealing for the situation that you’re in.
The advice I’m going to give you is that instead of looking to find a deal, I want you to look to make a deal. If you’re having a hard time getting the numbers to work on a property that you’re going to rent the rooms out to other students, you might be analyzing the wrong deal. So here’s what I’d like you to do. We’re going to work backwards from this. Let’s say that at the interest rate you’re being given at the price range you’re looking at, let’s say that you’re coming up with a $4,000 a month mortgage, which means you need to make more than $4,000 a month from the rentals. If you can get say $800 a room and you can get a five bedroom house, that now becomes $4,500. That could be enough to be more than the $4,000 mortgage. We’re assuming taxes and insurance are included in that $4,000 number. Which means your goal is to find a property that has five or more rooms.
Can you find a property that has five bedrooms but has a living room and a family room and you can convert the living room into two more rooms? Can you find a property that has four bathrooms and that has enough square footage that you can add stuff to? I’d set my search parameters to only show me stuff that has high square footage. In addition to that, I’d be looking at properties that have more square footage than is being advertised. So one of the things I do when I’m looking at houses is instead of clicking on the arrow to the right and looking at all the pictures that the agent has uploaded, I go backwards. I click the arrow to the left and I look at the back of the house first.
Now, the reason I do that is if there’s unpermitted square footage that’s ugly that the realtor doesn’t want to show in pictures, I want to see that. I want to see framing in the basement. I want to see the partially finished ADU. I want to see the extra garage on the property that has electrical and plumbing in it. A lot of people put bathrooms into their garages because when they’re out there working on their car, working on their projects, they want to be able to stop and go to the bathroom without walking in the main house. Well, once it has plumbing like that, you can finish out that bathroom and make it nicer and add a kitchenette into those properties for much less money than when you have to run plumbing and drainage all the way into that asset. So you need to look for properties like this that other people are missing.
Now, all of that being said, that might not still be enough because it looks like you’re looking in a town that doesn’t have a lot of inventory. That’s a problem. If you’re in a college town and there isn’t a lot of listings that are hitting the market right now, this is going to be tough. Part of that is because sellers are not putting their homes on the market because they’re waiting for prices to come back up. Sellers have seen, “Well, prices are down, people were selling for more before. I don’t want to sell my house for less money.” It takes a long time before they get to the point where they just willingly accept this is what a property is worth, and that frustrates buyers. So you could look in a different town and look to accomplish the same thing. Different college town that has more inventory, that’s one method you could take. Or you could use some of the creative methods like driving for dollars, skip tracing. You could look at neighborhoods and find the properties that are listed as more square footage. A lot of that’s public data.
So if you could figure out a system of finding the houses that are at least 3,000 square feet, you know they’re likely to have more bedrooms and bathrooms, you could go knock on their doors, you could call those people, you could send them letters. You could try to find an owner that is willing to sell, but again, this is not a great return on your time. The odds of finding the house that you want and then they also have a seller that’s willing to sell and they’re also going to do it at the price you want is very difficult. I know a lot of people pay money to take those courses, and this is very popular right now because deals are hard to find, so we’re out there trying to use creative methods.
What no one tells you is it’s basically like working a full-time job. Oftentimes after all the time you got to put in to make this happen, you’d have made more money if you’d just got a job and worked. So it’s not always the best method. What I do want to say is don’t be discouraged. You’re trying to do this at a very difficult time in the market. We are in a stalemate. Sellers don’t want to drop their prices because they’re not desperate yet. Buyers don’t want to or cannot pay the higher prices that sellers want, and there is not enough inventory to balance this out, so just stay in the fight. You never know when the next listing’s going to pop up.
What you want to make sure is that you see it first. So set your filter to show you only houses with at least 2,500, ideally 3,000 square feet, have more bathrooms, and then look at all the houses that come out and see if there’s more square footage in that house than what the listing actually says or that can be converted so that you can make maybe a five bedroom house into six bedrooms, plus it has a garage that can be converted into two to three bedrooms with a kitchenette and a bathroom. If you could do something like that, you can find a way to make the property work for what you’re looking to do.
All right. Our next question comes from Josh Lewis in San Diego. Josh says, “I love all your contributions to bp. You are a solid stalwart for the mission.” Well, thank you for that, Josh. “Some context, I own a property in San Diego. I have access to a large chunk of equity, approximately 350,000 to 450,000 depending on the appraisal, and I want to utilize a HELOC in conjunction with the BRRRR method to acquire my first rental property and kickstart my journey. Question, looking back on your career, if you were given the same circumstance, would you find it more advantageous to go after one larger expensive property like a $300,000 fixer upper to BRRRR in the lucrative California market? Or would you go after multiple properties, say, in the SEC football market, like $250,000 properties? For my circumstance, I’m giving more value to cash flow, but I do understand there are more factors at play here with potential long distance management, which I’ve already purchased both your BRRRR book and your Long-Distance Real Estate Investing. Thank you for your time and your propensity to educate.”
Well, Josh, thank you for your mastery of the English language. You said both propensity and stalwart as well as circumstance all in your questions here. Very impressive, my friend. All right, let’s get back to the first thing you said. Looking back in your career, “If you were given the same circumstance, would you find it more advantageous,” another big word, “to go after one larger expensive property or several smaller properties?” I don’t look at the number of properties as the way to approach this question. Now, I will say in general, less is better, because the more properties you have, the harder it’s to manage them. The more expensive they become and the more things you miss.
So I am in general inclined to buy a million dollar property over two $500,000 properties, but it’s not always that simple. I would more look at the total amount of capital that I’ve deployed, okay? So if I’m going to buy a million dollars worth of real estate, whether it’s over two $500,000 houses or $1 million house or three $300,000 houses, the number of houses isn’t where I start. What I would look at is the value of the properties I’m buying. What is the game plan here? What’s the play? I think people do better over the long term, investing in areas that both appreciate in price and cash flow, okay? It’s often framed like cash flow or appreciation, and it is isn’t true. When you’ve done this for as long as I have, you start to recognize patterns. And what you see is the areas that appreciate and value also appreciate in rents. The two almost always go hand in hand. And so cash flow grows over time just like the value of the asset grows over time.
When you buy in these cheaper markets, the $150,000 houses, it’s not that they don’t appreciate, it’s that the rent also doesn’t go up. And everybody here who bought into turnkey properties owns in the Midwest, I’m getting a hallelujah amen out of them, and they’re all saying now, “Wish somebody would’ve told me this,” because the assumption with real estate is that rents are going to go up every year, but your mortgage is going to stay the same. That’s what makes buy and hold so powerful.
But that doesn’t happen in every market. Some of the areas like Detroit, Indiana, the Midwest in general, the rents may go up, but it’s very small. It could be like 10, 15, 20 bucks a year sometimes. This is the issue that I have with my cheaper properties. Versus the stuff I bought in higher growing areas that was more expensive, you get big rent jumps sometimes. My California properties were jumping $200, $300 a year in rent. So it could go from 1,500 to 1,800 to 2,100 to 2,500 over a four-year period. And when you bought it and it made sense when you first got it at 1,500, it’s really nice at 2,500. That’s the strategy that I want to take.
Now, this doesn’t work if you have to go into it and you need the cash flow right away, which is why I tell people all the time, real estate is a bad thing to invest in if you need money now. This is a thing where you’re constantly delaying gratification. This is putting 20 bucks in the pocket of your coat and then finding it later like, “Oh, cool, I forgot that I put this in here.” It’s like a supercharged saving account that’s going to grow over time. Real estate works much better when you give it a longer timeline to grow, like planting a tree. You can’t expect fruit the first year you planted the tree. If that’s the situation that you’re in, you need to do something else. You need to plant a bush or you need to grow a garden of flowers that can be harvested and sold and it’s going to be more work. It’s not like planting a tree that just puts off passive income all the time. Passive income takes time to develop.
So the first thing I would tell you when you’re looking at what you should do here is invest in an area that is likely to grow, okay? When I talk about ways to make money in real estate, there’s basically 10 ways to make money in real estate that I’ve concluded and five of them have to do with equity, okay? The first one that I just described is what I call market appreciation equity. This is choosing a market that is more likely to appreciate than other markets. It is not speculation, it is not guessing. It’s using education and facts to make an educated decision.
The next is what I call natural equity. This is just inflation combined with paying down your loan. That’s going to happen no matter what it is you buy, but timing the market can help. When you buy into markets where you’re more likely to see inflationary pressures, you’re more likely to make money in real estate. So when I see inflation ramping up, I put more time and more money into real estate versus my businesses. If I see inflation slowing down, I’d be less inclined to go crazy buying real estate and I’d be more inclined to put money into businesses or other endeavors. When I say put money, I mean put time and energy into them.
Another way that you can build equity in real estate is buy what I call buying equity, and this is just getting a good deal. This is buying less than market value. So if you’re going after a million dollar asset and you can get it for $825,000, you just bought $175,000 worth of equity. So the actual deal itself plays a role in this. And then the fourth way that I talk about creating equity is forcing equity. This would be something like a value add. You’re going in there and you’re going to cosmetically improve it or you’re going to add square footage to it. You’re going to do something to make the property worth more.
Now, I don’t look for deals that have one of these elements, although I may buy a deal that has one of these elements if it’s got a lot of it, if I can add a ton of value, if it’s a super hot market. Maybe I buy into a really hot market, I buy a turnkey property because I believe that the market appreciation equity is going to make up for the lack of value add because there’s nothing to add, right? Or maybe opposite. I’ll go into a market that I don’t think is going to grow very much and I don’t even get a great deal on it, but I see there’s so much value I can add to the property that makes worth it. But in general, I look for a little bit of all four. I can’t remember what the fifth one is off the top of my head. I might have to think about that.
But that’s how I want you to be thinking. “How can I add value to these properties that’s going to build me equity if I don’t need the cash flow right away?” Now, this is not saying cash flow doesn’t matter. What this is saying is focus on your equity and then convert that into cash flow. Much easier to build half a million dollars of equity and then go invest that for cash flow than it is to try to save $500,000 and invest that for cash flow. That might take you 40 years to save $500,000. That’s a lot of money. You can build that over three to five years if you’re using the methods that I just described when it comes to creating equity and then improving that equity yourself. So the first thing I would do is I would’ve gone into the markets like California. And I bought it at a great time. That was just dumb luck. I got a lot of natural equity because I started buying in 2009 through 2013, and then we made quantitative easing, and boom, the market shot off.
And then I bought it in a great market. California went up more than other markets. I also bought well. I bought them under market value, and so I came in with some equity. What I didn’t do in California was I didn’t force equity. I didn’t buy properties and then fix them up because I didn’t understand real estate that well. I didn’t understand construction, I didn’t know how to look at a property and see a vision for it like what I can do right now. So that’s one thing I would change, is if I was going into it where you are with my eyes now, I’d be looking at those four things and seeing how do each four of these apply. This is what we call the Greene goggles. When you’re looking at real estate from my eyes, you’re looking for those four things.
I don’t like the multiple houses in one market because it gives an illusion of safety, like, “Well, I’ve spread it out over three houses.” It’s just oftentimes you’re buying three problems instead of one good deal, right? You don’t hear about any investors, at least in my whole career, that made a lot of money buying cheap real estate and getting a lot of it. It doesn’t work. It’s like going to the flea market, yeah, you can buy a lot of the, not Nike, but Bike. You can buy a lot of Bikey shoes because they’re cheap, but they fall apart really quick and they give you blisters and you wish you never bought them and then you never want to wear them and then you’re trying to get rid of them as soon as you can and the next sucker comes in and they buy these.
What you hear about when it comes to buying real estate are the three rules, is location, location, location. There’s a reason that all the salty whiteheads are all saying the same thing. They bought the right location. You see Warren Buffet give the same advice when it comes to stocks. He’s not looking to get the deal of the century. He’s looking to buy the best companies, which would be the equivalent of location in real estate, and he’s looking to buy more when the market is down, which would be the equivalent of natural appreciation or inflation and loan pay down in our world. He’s using the same principles I’m talking about now, but he’s applying it in the stock market.
Well, in the real estate market, this is how that works. You’re talking about cash flow, of course you want it, of course you should want it. We all should want that. What I want to advise you is that you don’t need it until retirement. You don’t need cash flow until you just cannot work anymore or you don’t want to work anymore. So if you can delay that, if you can let the property build equity for you, and let’s say you buy a million dollar property for 825,000, it goes up to 1.2 or maybe two properties that’s worth a million that you pay a total of 825,000 and they go up to 1.2 and then the market kind of stalls and you sell those in 1031 into a new fixer upper project, you go by $2 million worth of property and get them both for 1.67 and then they go up to 2.4, you’re actually creating equity at every single rotation of this snowball that’s going down a hill.
And then when you’ve got that equity, then go invest it into the cash flow and then reive your scenario and decide, “Do I want to keep investing? Do I want to chill? Do I want to quit my job? What’s my next step?” We got a lot more options if you take the road that I’m giving you now, which most people don’t see. I look at it a little bit differently, which is why you guys are here for Seeing Greene episode.
And I just reminded myself that I’m doing a Seeing Greene episode, so now the light is green behind me. I swear people like me do the dumbest things over the dumbest things, like I can give a brilliant response to some question and people are like, “Mind blown,” but I can’t remember to turn my light green before I record. This is very common for me. I have to put my keys and my wallet in my phone in the same place because if I don’t, I’ll leave the house without one of them. I’m terrible for that. So if you ever make mistakes, if you ever do absent-minded things, if you ever beat yourself up for doing something that you think you shouldn’t, leave me a comment. Tell me what are the things that you do that no one knows or make you feel so dumb that you can share with the rest of us? And let’s see if other people make the same mistakes.
I know that I will get a comment from someone that says, “How am I supposed to know this is a Seeing Greene episode if the light is blue behind David’s head?” We get those every so often when I forget to do this, even though the title will say Seeing Greene, and I’ll start the show-off by saying it Seeing Greene. There’s always someone who’s like, “I’m confused. Is it Seeing Greene or Seeing Blue?” What I do about this light?
All right, our next question is a video from Justin Pack in New York.

Justin:
Hey David, thanks so much for making this podcast. Really enjoy the fact that you all take the time out to answer our questions and help out us newbies. So you all always talk about how house hacking is a great strategy to get started. Well, I’ve achieved step one and got a house hack. I was able to live very cheaply, renting my house out by the rooms. It’s a single family in Dallas that I bought in 2019. I’ve now rented out all the rooms and moved out of the house. The problem is the property’s not profitable, losing just over $200 a month in expenses after everything’s accounted for, but I have still haven’t transitioned into not paying for utilities, internet and those other things there. So I now have almost $100,000 in equity in the property after the pandemic popped, and I’m looking to figure out ways to either make the property more profitable or figure out if I should sell it. Let me know your thoughts. Thank you.

David:
Justin. Good stuff, man. This is a great question and you’re giving me a platform to just rant about real estate in a way that I rarely get to. So I appreciate you thanking me for making the show, but I want to thank you and every other listener we have for asking great questions because we wouldn’t have this show without it. And trust me, lots of people are in your same position and are struggling with your same situation, so they’re going to love hearing this.
All right, let’s break this down a little bit. When I first started investing, I had this thought. It was like 2007 and I was trying to figure out what could I buy, and I was talking to agents and I was like, “Yeah, I want a property that’s going to make more money than it cost to own it.” And they were laughing at me like, “Real estate doesn’t work that way. You don’t buy a property that makes more money every month than what it costs, at least not when you first buy it.” This was in the height of the market exploding, and so of course nothing was going to cash flow at that time. And I didn’t pull the trigger. I’m glad, because waiting, I got a better opportunity.
But I did realize something in that moment. In a sense, they were right. Real estate only cash flows if you get an incredible deal or you buy in at an incredible time or there’s not enough competition for the assets that you have an incredible opportunity, or you wait. Okay? Now I know this is going to sound like blaspheming real estate for the cash flow investors out there, so just hear me out. When you look at other countries, Australia, Europe, South America, their real estate does not cash flow when you buy it.
This is crazy. This is kind of an American phenomena. Nobody buying in Toronto is getting cash flow. Very few people that are investing in most Canadian areas are getting cash flow. In fact, the only areas that typically do cash flow historically at all times are the areas where management is a burden. You actually have to make it like a job to manage the property and manage the tenants. It is not passive income. We’ve become accustomed to this because we came out of such a huge crash in our economy and real estate that no one wanted to own these assets and no one wanted to buy. So we ended up with way more tenants. And then we also paired that with an economic boom after the crash where everyone is making more money, wages were going up. The value of these assets was going up. Inflation ran rampant. We had this perfect mix of you could buy real estate at incredibly low prices and then the economy soared after that. You got the best of both worlds. The result was cashflow became the norm.
And so as investors, we would just peruse through Zillow looking at every house and saying, “What has the best cash flow?” And it was awesome. I jumped in with both feet, right? I was working a hundred hours a week as a cop, saving as much money as I could because I felt like Super Mario when he touches the flower and he’s invincible and everything that I touched dies, that’s what I was doing. I’m like, “Dude, I’m going at a dead sprint and I’m buying as much of this real estate as I can.” Rates were low, property values were low, everything cash flowed. I could buy in the best markets and I could cash flow, and I was getting appreciation. I was like, “Everything was great,” and it all came to a screeching halt once we started to raise rates, and now we’re all frustrated. “I can’t make it cash flow. I’m doing something wrong. I’m messing up. I’m bad at this. Maybe I should go do something else.” No, this is actually normal.
Nothing in Australia’s going to cash flow. Nothing in Canada’s going to cash flow. Nothing in Europe cash flows. In fact, if you go to other parts of the world, you don’t get FHA loans. You don’t put 3.5% down on an asset. In fact, nobody gives loans for 30 years at a fixed rate of 3% or 4%. No one gives loans at a 30-year fixed rate anywhere. You wouldn’t do that. You wouldn’t lend your own money for 4% for 30 years fixed. That only happens because our government sponsors these loans. We’ve got a whole system created to keep interest rates low, and I won’t go into that right now, but this is why I started The One Brokerage is because I was fascinated with how lending worked, and I wanted to learn more about it and be able to help people buy real estate from lenders that they could trust. But I realized, “Oh my God, this is crazy.”
If you go to Egypt, they’re going to ask you to put 50% down and there’s going to be a balloon payment in two to three years, okay? It’s almost like a construction loan. A lot of people in other countries are paying cash for their houses, which is why houses are passed down from generation to generation. You can’t buy it. Okay? So it’s a little bit of a background in how hard real estate investing is in other places.
Here’s what I learned in 2007. Even if I paid ridiculously high prices for that real estate and I lost money every month, when you look at rent going up over time, your mortgage staying the same over time, the principle being paid down on the debt over time, I put it into a graph basically and I saw there was a break even point at about seven years in where I would lose money every year and at seven years years in I would start to make money. And then I said, “Okay, well, how much money will I have lost over seven years? And now that I’m making money, how long will I have to wait before I get paid back for the money I lost?” And at about nine years, I noticed like, “Okay, I’ve now broken even from cash flow.” This is before you get the loan paid down. This is before you get any kind of appreciation. This is just purely from rents going up.
And I realized, “Well, if I’m going to own this asset for 30 years, 40 years, 50 years, and I just got to wait nine years before I break even, that’s not the end of the world, especially if the tenant’s paying the mortgage off for me. So when I looked at it at a 30-year perspective and I ran the numbers, I saw, “There’s nothing that comes even close to this. I just got to be able to make it nine years of losing money, and then I’m golden.” Now, please stop screaming. Don’t yell at your phone. Don’t yell at your computer. I know what you’re thinking, like, “Don’t ever do that.” I’m not telling you guys to go do it. I’m saying it makes sense to do that if you take a long-term approach. When we take a short-term approach, when we say, “I want to quit my job right now, I need to find a duplex so that I can do it. I need money right now. I want to buy a Tesla right now. I need immediate gratification,” real estate becomes very frustrating.
I don’t have hardly any deals that made me a ton of money right out the gate, but I have zero deals that don’t make me money after I’ve owned them for a while. And I learned that delayed gratification is really the secret to wealth building as well as real estate investing. The deals that I bought, I have one in the top of my head right now, okay? It’s this 8,000 square foot cabin that I bought in the Smokey Mountains. It was owned by an executive at either Coca-Cola or Pepsi, I get them mixed up, but he was responsible for developing the extra value meal at fast food restaurants. So he got them to sell more sodas because a soda came with every single meal when they did the extra value meals.
He built this amazingly huge awesome place, okay? I bought it and it is making me money. It’s doing well because it can sleep like 30 to 40 people. It’s very unique. I tend to buy real estate that doesn’t just fall into a cookie cutter pattern, and this is why. But when you look at how much I can charge per night on that property, some of my other cabins maybe go for 200, $300 a night. That’s like the cheap stuff, okay? So if I get a 10% increase on that in a year, which would be really good, I go up 20 to 30 bucks a night. But on these expensive places that maybe I can charge 1,500 a night, a 10% increase is $150 a night.
Now multiply $20 a night times however many, 200 days in a year, or 150 times 200 days in a year, and the next year I’m getting a 10% increase hypothetically on the 1,500, that now became at 150 to that, so I’m getting a 10% increase on the 1,650. Okay, now my rents are going up $165 a night. It exponentially starts to increase because I bought more expensive real estate in markets that didn’t immediately take… It didn’t make me a ton of cash flow right off the bat, but it will grow to make much more cash flow.
This principle is what I wanted to highlight. Now, I want to bring this back to your specific scenario, my man. You are losing money right now, but you’ve gained a hundred thousand dollars of equity so you haven’t lost money, okay? You got to go through a lot of months of losing $200 a month before you actually break even at the $100,000 of equity that you have. So the question isn’t, “Do I need to sell this thing immediately and not lose the 200 a month?” unless your finances are in a position that you can’t take that blow. If you live paycheck to paycheck, $200 a month is devastating.
If you can’t find a one day of overtime or a side job… I mean, I know waiters that make 200 bucks a night work in a shift at a restaurant, okay? And if you said to me, “David, you got to work once a week.” No, once a month at a restaurant in order to not lose money on this real estate deal. You’re going to lose 200 bucks a month on the deal, but you’re going to make 200 bucks a month at the restaurant. Would you be willing to work once a month for the next 30 years to have a property completely paid off and appreciated? In fact, it wouldn’t even have to be for 30 years because at some point the rents are going to catch up. That is a no-brainer yes, do that. Okay?
The reason you’re feeling bad is might be ego. You’re looking at other investors that are making money. You’re looking at your balance sheet every month and you’re saying, “Well, I’m losing money. I’m doing it wrong.” Maybe not. Maybe this is how real estate has always worked over time. It was the people willing to lose in the short term to make money in the long term that worked.
Now, I hope it doesn’t stay that way, but I am preparing for a reality where the golden age where you’re just bobbing for apples, you just put your mouth in there and you came out and you hope your apple’s bigger than the other apples, but you always got an apple, that could be over. I don’t know. I don’t know, but I know that we kept interest rates really low for a really long time. And if you wanted a house at all, you had to overpay. You couldn’t get inspections. You got in a bidding war, you were very uncomfortable, you didn’t know what you were going to end up with, and it was risky. And I know that wasn’t healthy either even if you got cashflow right off the bat.
Now that we’re letting interest rates come up to kind of more traditionally normal levels, we’re all freaking out saying, “This isn’t how real estate works.” It might be that we have to accept that this is the new normal. And location, location, location is becoming important. Why? Because that’s where the rents go up. When you buy in the best location or you buy the best property, the rents go up everywhere and you get out of that hole faster. You get out of the hole of losing money faster.
Now, I’m not telling anyone here, go buy properties that lose money, okay? If you could avoid it, avoid it. I am saying, Justin, that you might not be in the worst situation ever. It might be your ego or you’re comparing yourself to other people’s deals that’s making you feel bad about this. Okay? This is Dallas, Texas. This is one of the hottest markets in the country. If I had to pick a market to put my money in over the next 15, 20 years, Dallas, Texas would be in my top three. That is a awesome market. You are going to continue to crush it in both rent growth and equity growth buying in Dallas. That’s a great place to park your money. It’s going to grow faster than if you found a place that cash flowed positively 200 bucks, but just was stagnant from that point forward. I don’t think this is a bad investment.
Now, it is a three bed, three and a half bath, okay? What if you just had a five bed, three and a half bath? Could you sell this property, move that money to another property in Dallas, Texas that was five bedrooms? That might solve your cash flow problem right away and you’re going to get more appreciation, okay? You did everything right. You just bought a house a little bit too small. If you just had two more bedrooms, maybe even one more bedroom, you wouldn’t have the negative cash flow. So this is an easy problem for you to solve. Sell it, move your equity into another deal that has more bedrooms. Boom, your cash flow positive. Keep it in that market for the long term, right? You want to plant a tree in Dallas, just uproot it, plant another tree also in Dallas.
But even if you can’t, for some reason if you don’t, it doesn’t mean you made a bad deal. You’re going to make a lot of money on this deal. Drop the expectation that real estate is supposed to be the magic pill that solves all of your problems in day one. You’re doing great, man. And you learned a lot from the deal, okay? You should be doubling down on real estate investing. You’re the person that should be investing more, buying more properties, doing better on everyone. Just make the small adjustment. When you’re running by the room, you need more rooms. It’s that simple, right? If you’re to sell cars, sell more expensive cars.
Sometimes there’s a tiny little thing that we can tweak that makes a huge difference in the returns that we get. For you, the minute that I see you bought a three bedroom, three and a half bathroom, I just think I wish the David Greene team had represented him because we wouldn’t have let you buy a three bedroom house. We would’ve looked for a five bedroom house that also had the ability to frame another bedroom out of a den and make it six bedrooms, and then you’d be making a bunch of money.
But I will tell you, the cashflow on this property will pale in comparison to the money that you make paying off your loan and letting the value increase over time. Thank you very much for your question. This was really, really good. Hang in there Dallas. Rents are going to continue going up while the rest of the countries don’t keep pace because that’s a great place to invest where a lot of people are moving to. Send me another question if you want to get deeper into what you could do to sell that property, what you need to talk to the agent about, where you should list it and where you could put the money into a new property.
All right, everybody, thank you for submitting these questions. I love it. In fact, I’ve talked a lot longer than I normally do on some of these because I’m so fired up about these questions. And I know so many of you love real estate just like I do, and you’re freaking frustrated. It’s very hard to find a place to put your money for a long time. You succeeded just by getting over the fear of investing and we were like, “Just do it. Just do it. Just do it,” and everybody did good. It’s not so much just getting over the fear. Now you got to get over the fear and you got to be willing to take a couple lumps and you got to look for a deal very hard. This is a harder time to invest than any that I’ve seen. At the same time, the potential’s probably bigger than it’s ever been. Okay?
I bought a lot of real estate recently, and I know that when rates do come back down, these deals that were like meh, are going to immediately look amazing. And over time with inflation, I want a portfolio worth $50 million going up as opposed to a portfolio worth $15 million increasing with time. All right. At this segment of the show, we are going to share some of the comments on YouTube, and I want to share your comments. So if you’d be so kind, go to the comments section on the BiggerPockets YouTube page and tell me what you think about the show. Is it funny? Do you like it? Are you annoyed that I keep forgetting to turn the light green, or is the humor actually breaking up the show? Let me know.
Our first comment comes from Susan Owen. “David Greene, thank you for this episode is my favorite in two years of listening.” This comes from episode 723 that we did. “I really appreciate the advice you gave the veteran in this episode.” Well, thank you Susan and thank you to all the veterans who served our country and served your fellow Americans with what you did. Respect to you.
Next comes from Lexi York. “I love how real he keeps it!” With an exclamation point. That’s pretty real. “Too many social media influencers out there preaching fake news and misleading people.” Thank you, Lexi. That’s not something that you’re ever going to get from me. When the market was exploding and inflation was taken off, I was telling people, “You got to buy. You got to put your money somewhere.” And now that it’s slowed down, I’m telling people, “Take your time and pick a deal, but wait. Give yourself a long runway of this real estate you’re buying. Don’t expect it to perform immediately right away.” Hey, if we could take nine months to grow a baby in a womb and we can wait that long for the joy of having a kid, you could wait a couple years before your properties are going to be cash flowing really high.
All right. And from OmarKansas1, “Yes! So glad you listened to Nate Bargatze’s podcast. I liked you before, but you just jumped up lots of levels in my book, seeing him in Vegas on Saturday.” Thank you for that, OmarKansas. I love Nate Bargatze. He’s a hilarious comedian. Check out his Netflix shows. This is where we got the idea to read comments because I would listen to his podcast and listeners would say the funniest stuff and he would try to read it on the show. It was very funny. That’s why we do this here. So thanks for that.
Also, if you see Nate at the show, tell him to come on ours. We want to get Nate on the BiggerPockets podcast and learn about his story. If he invests in real estate, what he invests in, or if he just makes jokes for a living and has no idea to do what to do with money, go tell him about BiggerPockets and see if he would come on our show. We’d love to have him.
All right, if you didn’t know before we move on, there is a new YouTube show that I’ll be a part of, okay? This is on the BiggerPockets YouTube channel. We are going to be talking about people that want to make a career in real estate as opposed to just become a full-time investor. Do you have a question about how to grow in your current job? You want to work in real estate or you want to maximize your earnings? We’re creating a brand new YouTube show all about using your W2 to start investing and grow your wealth. Use biggerpockets.com/david and choose the job question on the form, okay? So if you want to be on this show, you go to biggerpockets.com/david. You submit your question, we try to get you on. If you want to go on that show, you go to the same place, biggerpockets.com/david and just click the box that says Job Question, and we can have your question answered on the other podcast.
So this is for people that love real estate, but they’re not ready to just jump in with both feet, quit their job and try to make it as a wholesaler. Okay? Sometimes making more money at your W2 is a good thing. Sometimes starting a business is a good thing. And I suppose if you think about it, becoming a wholesaler is the form of starting a business. It’s not a form of just becoming a full-time real estate investor and living off the rental income. It’s what I did. So if you love real estate and you love working and you love making money and you love excellence, go to BiggerPockets.com/david and leave me a question there.
All right. Our next video clip comes from Brian Lucy in Colorado.

Brian:
My question is, I have a couple deals that are on our contract right now, and I would like funding for one of them specifically, but I have been trying to find private lenders that I can use that will fund the property. I’m trying to find out how I would go about vetting people that I find on Facebook. I’m a part of quite a few groups on Facebook and I want to make sure that these people are legit and won’t scam me out of my money because I’ve already had that situation happen once and it was a lot of money. So I’m wondering how do you go about vetting private lenders in order to find out if they are legitimate lenders. I’ve had one guy that told me to send him money prior to closing in order to do some administrative thing. I appreciate any help that you could help me out with this. Thank you so much, David. Love the show. Thank you.

David:
All right, Brian, thank you for that question. First off, very sorry to hear you got scanned by somebody. There’s a lot of scamming going on. There’s people with fake Instagram accounts that are saying that they’re me that are not. I’m actually nervous about this because I think people will be sending links that look like they’re coming from me to get people to sign up for stuff that I’m doing and it’s not going to be me. So you got to be super, super careful about vetting places before you send money.
One way that I’ve recommended that people look out for that is to ask for a voice memo from me if you think it’s me that’s asking you for something, like, “Hey, can you send me a video? Can you send me a voice memo?” You know what my voice sounds like, that’d be harder to replicate. Now, as far as how this happened with a private lender, it should be done through a title company. Okay, the money should be going to the title company and they shouldn’t be releasing any of it until it’s an escrow. That’s the way that I would avoid this, is if you’re just sending money back and forth between people you don’t know, there’s no immune system there. There’s no protection for you. So I try to avoid that.
But frankly, I’ve never had a problem of having someone rip me off off because I’ve only borrowed money from people that either I knew or that knew me. I don’t ask them for anything. There’s no, “Send me this money for an administration fee before I give you a bunch of my money.” That just shouldn’t be happening, okay? If there is going to be closing costs from this private lender, they should be done through a title company and they should fund their portion of money that they’re lending you into the escrow account, and then you can fund your administration fee or whatever they’re charging you into that escrow account, and the title company can release your funds to them only after they have their funds for you.
You want to have a neutral third party that’s going to protect you if you don’t know the person. Very sorry that happened, but thank you for sharing that with our audience so that more people don’t get ripped off because I can see in the future, it’s so easy to make social media profiles. It’s so easy to pretend to be someone else. That wire fraud is going to become more and more prevalent.
All right. Our last question comes from Heather Cha in the Bay Area. Heather says, “I’m finally at a stage where I’m committed to investing but have to look out of state. I’m currently looking at Dallas, Indianapolis, Atlanta, and Jacksonville. I’m specifically looking for long-term rentals and I have close to 800 credit score with money saved up and no debt. As a first time amateur real estate investor, do you recommend finding something that doesn’t need renovation? I have rented my whole life, so I really have no experience working with contractors since I’m really looking for somewhere out of state. I have the added layer of stress of not being close to the market I’m looking in. Thank you for your time.”
All right, well, first off, Heather, if you’re in the Bay Area, reach out to me. You never know when you need real estate help in California, and I got you when that comes. But if it comes to long distance investing, check out the book that I wrote about that topic. And yes, quite frankly, if you don’t have experience investing in real estate or knowing construction or working with contractors, don’t take on an out-of-state project. This is one of the fastest ways that people can make big mistakes and lose big money. In fact, the people who do out-of-state deals that have renovations on their first time, if they don’t lose money, they just got lucky. This happens all the time. All right?
So I don’t want you to buy a project that needs renovation other than small things that a handyman can handle, and your agent has referrals and they can oversee the project for you if you’re not there. Instead, I would be focusing on trying to buy a vacation rental and have it managed by a company that actually has experience doing that. I can put you in touch with a property management company I use if you’re in the Jacksonville area. They do some short-term rentals. I’m trying to remember the name of the city where a lot of people are doing really well. It’s not coming to mind right now, but if you reach out to me, especially with you being a Bay Area native, I will do my best to connect you with people. I’ll be happy to support you and look for ways you can support me.
All right, everybody. That is our show. I want to know in the comments, did I talk to long? Do you like it when I talk longer? Are you okay with shows that go a little bit longer? Do you want to keep these super, super tight because you’re on a schedule? Let me know when the timeline, if you would like longer shows or shorter shows, as well as what you think about some of the rants that I went on. Did that benefit you? Did you learn about the principles of real estate? Or do you just want to get to the nitty gritty? We read these comments and we adjust our approach based off of what you’re saying. Thank you again for your time listening. I know attention is expensive and you guys could be learning from anyone, so I really appreciate that you’re here learning from me and us at BiggerPockets.
If you want to follow me and learn more about what I’m doing, you can go to davidgreene24.com, or you could follow me on social media @DavidGreene24 on Twitter, Instagram, YouTube, whatever it is that’s you fancy, you can find me everywhere. I’m going to be putting a retreat together in Scottsdale at the property that Rob and I bought. So if you’re into goal setting, check that out at davidgreene24.com/retreats. And also, guys, if you skip through the BiggerPockets ads, stop doing that. Listen to them because I run ads on the BiggerPockets Podcast, and I want you to hear about some of the products that you can get from me where I can help you. So if you’re like me and sometimes you skip through ads, don’t, because there’s Easter eggs in there. You might hear my sultry deep base filled, smooth voice telling you about some of the things that I have going on, how we can meet in person, and how I can help you with your goals. Thanks again. If you have a minute, listen to another BiggerPockets video. And if you don’t, I’ll see you on the next one.